Bargain retailer Grocery Outlet will open 25 stores this year
Grocery Outlet plans to open 25 new stores in 2018, primarily in existing markets of California, Oregon, Washington, Idaho, Nevada and Pennsylvania, reports Winsight Grocery Business. Fourteen of the discount grocer's new locations will be in Los Angeles.
The company sees an opportunity to provide affordable stores in underserved neighborhoods. Census data from 2015 shows that residents of South Los Angeles have just .57 supermarkets per 10,000 residents, Winsight and L.A. Weekly reported.
The bargain retailer, which is independently owned and operated, acquires most of its food by purchasing overstock and foods that have had packaging changes from food manufacturers at a discount. By purchasing food at a discount, Grocery Outlet passes on the savings to consumers, at prices 40-70% less than those of traditional retailers.
The crowded Southern California grocery market is about to get a little more cramped as discount chain Grocery Outlet (GO) opens 14 new stores in Los Angeles this year. Among the various food retailers, GO is a little bit of an oddity. With roots as a military surplus food supplier, the family-owned company has undergone several iterations to reach its present form as a community grocer focused on providing foods — especially fresh foods at a discount — to 270 stores across the country.
To understand what GO is, it may be easier to think of what it isn’t. With store square footage ranging from 10,000 – 25,000, it’s significantly smaller than traditional grocery stores, which average 45,000 square feet. More similar to Aldi in size, GO carries mostly brand names versus private labels. GO is much more intimate than a warehouse retailer like Costco, and doesn’t require a membership, but since it purchases goods based on opportunity like Costco, its offerings may vary, depending on what's available. Perhaps Melissa Porter, the company’s vice president of marketing, described the company best when she told the Los Angeles Times, “It’s like a TJ Maxx, but for food.”
But what may make GO special, and ultimately give it the leg up on increasing competition, is its community focus. In addition to being a family owned company, it stresses finding independent owners who live in the communities where their stores operate. This allows every location to tailor its store to meet the community and customer preferences, retail expert Phil Lempert, known as the Supermarket Guru, told the Pasadena Star-News. “Ever Grocery Outlet I’ve been to has a different feel,” he said, adding that the individual owners can then bring their families and friends into the stores as loyal customers, leading to more success.
And don’t underestimate the value of those community connections. In the SoCal retail glut, there’s one place that isn’t so saturated: South Los Angeles. Unlike most retailers, GO has staked a claim in this area that is still scarred by the 1992 riots, when grocery stores were burned down and didn’t return. A longtime food desert, this area has seen a gradual extinction of stores that sell fresh, healthy produce, with few grocers willing to venture into the lower-income neighborhoods. Grocery Outlet’s 2016 opening of its Compton store is an example of the retailer’s ability to go into challenging areas and thrive by engaging with the community.
Will the community connection help GO succeed in more affluent areas of SoCal? Several trends are on its side: low prices, shoppers’ increased desire to purchase fresh produce, and personalization. Aldi may offer the most competition to GO, but GO’s community roots may provide a crucial competitive advantage.
- Winsight Grocery Business Grocery Outlet to open 25 new stores in 2018